Committed: Calpers Deepens Multibillion-Dollar Ties With Blackstone

The California Public Employees’ Retirement System topped up the war chest of Blackstone Group Tactical Opportunities team with another $500 million, deepening its multibillion-dollar footprint with the New York firm.

The nation’s largest public pension fund has been laying the groundwork to pledge larger checks to a handful of firms while cutting its total number of managers. In concentrating large amounts of capital with a few managers, limited partners are funneling more money to the biggest alternatives firms equipped to invest across a range of strategies.

Calpers’s latest commitment to Blackstone will be managed in an account customized for the $300 billion-plus pension fund, giving it a bigger voice in shaping the portfolio. This will bring Calpers’s pledges to Blackstone’s Tactical Opportunities platform to about $1.4 billion since 2012, a pension fund spokesman said. Calpers disclosed the pledge this week in an investment report.

This latest mandate from Calpers is a coup for Blackstone as the buyout shop-turned-alternatives firm looks to lock in more captive capital. Calpers’s latest pledge gives the Tactical Opportunities group, which cycles between various strategies and styles, extra firepower to bid for fast-moving deals.

Since the late 1990s, Calpers had committed more than $3.5 billion to active Blackstone partnerships as of Sept. 30.

The Wall Street Journal reported earlier this week that Calpers plans to slash the number of firms that manage its money to reduce costs and ease staffing burdens , which would potentially free up more capital for its key relationships. A spokesman said the pension fund hasn’t officially embarked on the cuts yet.

Blackstone has been successful in winning hefty mandates from public investors because it has cultivated the image that it can deliver returns even as it gets bigger, challenging the notion that returns suffer as a firm’s asset base grows and it is pressured to put more dry powder to work. This has helped shape the view that private equity can be a scalable business, said an investment official at another public fund with a sizable Blackstone exposure.

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